The federal government on Monday morning filed papers to dismiss a high-profile civil lawsuit that sought to seize Tim
Durham’s assets, including his 30,000-square-foot Geist mansion and his 2008 Bugatti sports car.
Tim Morrison, the U.S. attorney for the Southern District of Indiana, said his office had filed the case Nov. 24 to ensure Durham’s assets would not disappear.
“Having [received] appropriate assurance they are not being dissipated, that litigation stopped,” said
Morrison, who declined to say who provided that assurance.
The short-lived case provided the first public disclosure
about the case investigators are trying to build against Durham, 47, the co-owner of Akron. Ohio-based Fair Finance Co. FBI
agents on Nov. 24 executed search warrants and seized records and computer equipment at Durham’s office in Chase Tower
in Indianapolis and at Fair’s Akron offices, but a bureau spokeswoman would not say what agents were after.
The asset-seizure lawsuit alleged Durham, his associates and his companies misled purchasers of investment certificates
by telling them their money would go toward purchasing low-risk consumer loans. In fact, court papers allege, the money went
to carry out a Ponzi scheme, using money from new investors to pay what it owed prior investors, thereby “lulling the
earlier victims into believing that their money was being [handled] responsibly.”
The suit was filed one
month after IBJ published an investigative
story questioning whether Fair, which purchases customer-finance contracts from retailers
and other firms, had the financial wherewithal to repay purchasers of about $200 million in investment certificates.
The company was allowed to sell the certificates—which range from six months to two years—only to Ohio residents.
The IBJ story reported that, since Durham bought Fair Finance from Donald Fair in 2002, he had used it almost
like a personal bank to fund a range of business interests, some of them unsuccessful. The story noted that he and related
parties owed Fair more than $168 million.
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Feds drop Durham asset-seizure suit
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"And the success of the Indiana GOP to not allow an expansion of Medicaid had nothing to do with Indiana hospitals' financial woes? Fixed that for you; editorial bias rebalanced. Seriously, there are so many things wrong with Obamacare that the only way one can view it as a success is to assume that it was designed to fail our way into a government single payor healthcare system. The system is complex, creates huge regulatory burdens and overhead and yet still does not have adequate means to control escalating health care costs. But then when you elect a 10th grade math drop out with no quantitative reasoning skills to be President of one of the world's most important economies in troubled times, you can't really be surprised by blatant stupidity.
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No NIMBYs here to chase off a decent development. We don't need tons of parking and we'd happily play the role of host to a downtown Whole Foods.
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Whatever you do, don't change a single thing about Broad Ripple. I want it to look just like it did in the late '70s, with 30% of the north side of Broad Ripple Avenue burned out and plenty of places to park. That's right Broad Ripple, NEVER CHANGE. Let the world pass you by, don't improve your empty, abandoned lots full of weeds. Someday someone will want to film a zombie movie here.
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Hollywood could step in and make a movie about the history about this forlorn series. It could be a full celebrity cast of characters. WOW. http://www.advanceindiana.blogspot.com/2013/02/indiana-taxpayers-forced-to-pay-for.html
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This shouldn't come as a shock to many. Austin is a great city, and Indy needs to take some notes. Austin invests in decent transit options, has a highly educated workforce, embraces a creative class, and --despite being the state capital-- is not micromanaged by rural and suburban legislators. Want Indy to grow? Invest in the city (i.e. spend money). Raise taxes a bit, and use the money to improve education. And keep the state legislature out of Indy the other 9 months of the year.
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SEC probing Durham deal with Texas firm
Greg AndrewsDecember 1, 2009Keywords Banking & Finance, Investing, Tim Durham
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CommentsE-mailPrintRelated Articles
Feds drop Durham asset-seizure suit
Fair Finance offices fail to reopen
Disclosures key to feds' probe of Durham's Fair Finance
Related-party loans pile up at Durham-owned finance firm
NewsTalk: Rich flocking to real estateIn Depth
Hospitals suffer from spiking bond interest rates, investment losses
Nervous banks cut off some borrowers, tighten reins on othersADVERTISEMENTA Texas company where Tim Durham is chairman acknowledged on Tuesday that the Securities and Exchange Commission is investigating financial dealings between it and Fair Finance Co., an Ohio-based firm where Durham is CEO.
The transactions between Dallas-based CLST Holdings Inc. and Fair were the subject of an IBJ article early this year that raised questions about conflicts of interest.
Publicly traded CLST revealed the SEC investigation in a filing with the commission. The filing said that the company, Durham, CEO Robert Kaiser and director David Tornek all received subpoenas.
The filing reveals for the first time that the SEC is conducting its own investigation of Durhamâ??s business dealings and that the probe extends beyond Fair Finance, the consumer-finance firm Durham co-owns. The only previously public federal investigation was one being conducted by the U.S. Department of Justice.
CLST was a cell-phone distributor known as CellStar Corp. until about three years ago, when the company sold off its business units to several buyers, including locally based Brightpoint Inc. Soon thereafter, Durham won election to the board, in part by pledging to dissolve the company quickly and distribute remaining cash to shareholders.
But about a year ago, CLST reversed course and began buying consumer finance contracts, including about $3.6 million it acquired from Fair Finance.
That transaction outraged CLST board member Manoj Rajegowda, who resigned in protest. A letter Rajegowda's attorney sent the company said he "was not informed of this transaction and most strenuously objects to it."
CLSTâ??s Kaiser in March defended the companyâ??s new strategy of buying receivables, saying they might generate a handsome return. "With cash earning less than 1 percent, some of these other portfolios will prove to be more valuable than holding cash," he told IBJ at the time.
The company made no mention at the time that Fair was selling the receivables because it badly needed to raise cash to repay Ohioans who had purchased about $200 million in short-term investment certificates.
Fair acknowledged the financial strain in a document it filed about a month ago with the Ohio Department of Commerce's Division of Securities.
â??At the beginning of 2009, management of Fair Finance Company was concerned about the effect that the countryâ??s economic downturn may have upon Fairâ??s ability to obtain sufficient capital to pay interest to its investors and to repay investment certificates as they become due,â?? the document said.
The future of Fair has been uncertain since FBI agents on Nov. 24 executed search warrants and seized records and computer equipment at Fair and at the Indianapolis offices of Durham, 47, co-owner of the business. Fair was closed all last week for the Thanksgiving holiday and has not reopened.
The raid came one month after IBJ published an investigative story questioning whether Fair had the financial wherewithal to repay purchasers of the investment certificates.
The story reported that, since Durham bought Fair Finance from Donald Fair in 2002, Durham had used it almost like a personal bank to fund a range of business interests, some of them unsuccessful. The story noted that he and related parties owed Fair more than $168 million.
Court papers recently filed by the U.S. Attorneyâ??s Office in Indianapolis show the government is trying to build a case that Durham operated a Ponzi scheme, using money from new investors to pay what it owed prior investors, thereby â??lulling the earlier victims into believing that their money was being [handled] responsibly.â??
Fair has not been permitted to sell investment certificates since Nov. 24, when its previous securities registration expired. The Ohio Division of Securities has not acted on the companyâ??s request for a new registration.
John Tompkins, an attorney for Durham, has said his client believes he had not done anything wrong.
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IBJ Conversations3 CommentsAdd Comment
CLST
Letter to Tim and CarlDecember 1, 2009 2:16 PM
Dear Tim and Carl,
It gets so confusing trying to keep who said what straight. For example Carl, you said that you just wanted to get some business experience which is why you agreed to be on Tim's board. Then gosh darn it I find out that you, Carl, owns stock in CLST! Now Carl, tell us all, did you have secret information that CLST wasn't really going to pay Verizon that cash on the balance sheet and the money was going to be distributed to shareholders so you bought the stock on what was then non-public information or the prior shareholders including Indiana-based Moorehead Communications would have never sold??
Or, did you agree to the alternative, that Tim could use the money to bail out Fair Finance! Cuz that is what he was doing, right? Who in their right mind would use good, solid greenback cash, during a systemic credit market collapse, to purchase poor quality receivables that are already in default? I don't think you have to have any business experience to know that. I know 12 year old boys who knew the country was in collapse. You, Sir, have kids of your own, right? Like the one child whose gymnastics bills you got sued over for failure to pay in 2004?
Since this letter is to both of you, this portion is for Tim. Tim, what kind of friend are you to do this to poor Carl? Before you, Carl was a loving husband, devoted Dad and decent public servant. Now he is a posterchild for public shame. He is standing up for you, but from you, all we get is deafening silence and a bunch of hooplah from one of your attorneys because another of yours allegedly managed to get the asset seizure called off. You, and I can't really address you as Sir because you are anything but, are no friend to do this to Carl. C'mon, if you can help your friend out financially, can't you just have one of those fancy press conferences like Carl did and speak out? You can do it, high pitched voice and all, you really can.
â?¢ The Ohio Division of Securities investor protection information hot line at 800-788-1194 and 614-466-6140.
â?¢ The FBI at 800-CALL-FBI.
Send your video of Carl pretending to be John Travolta in Fever to Gary Welsh over at Advance Indiana, it would look good on his blog.
I really thought that Micky would do the whole thing right. It's obvious that Mitch got to him also. No more tax abaitments there Micki?
Did Mitch get to the media right after he made the call to get Durham back in Biz? This smacks of total corruption at the top. The interview with Brizzi last night was pablum to say the least. They send a rookie reporter to interview a seasoned PR attorney. Who did you really think would come out on top. He ate her alive. Carl, you are a great dancer. But then agian you have hung out with enough strippers to lean how to dance. Remember Miami,???The Boat, Collins Ave?
That interview last night was a set up for Brizzi. Softballs. Why only that station. Could it be that it was set up that way. Notice that Russ was not there. If he had been the story woudl have been different. He would not have let Brizzi off like the young lady did. She was in way over her head.
Toast?, Lincoln Road?
Did you get video when you were asked by Tim to dress in all white?
Watch, this whole thing will go away. Tim Motsinger took the bullet for the rest of them. Tom John needs to do the right thing and step down. He was in the middle of all of the Durham money that went to the Cronies.
Very sad day in Indiana.This story is going away, Durhamn is free to get rid of all of the evidence and life is good for Brizzi.
Even the so called strong blue bloggers are backing off.
Just keep the information in your cache, cause its going to be gone soon.
Harry Garlough, a Fair Financial investor from Leetonia, said he has been investing for almost five years and was shocked at the Nov. 24 raid, which came a month after an Indianapolis Business Journal report questioned Fair Financial Co. and its ability to repay Ohio investors. The story noted he and related parties owe more than $168 million.
"I don't know if this guy's a crook, if he's done something illegal or is dumber than hell and doesn't care," he said Monday. "Sounds to me like he's robbed the company of $168 million and spent it foolishly or I don't know. I wish I knew more. I have a substantial amount in it ... I can't afford to lose that kind of money."
Danzer: Bankrupt. Indy Mens Magazine: Closed. Obsidian Enterprises: Taken private after repeated millions in losses and Going Concern Letters. National Lampoon: Millions in losses; Pyramid Coach: Dissolved after Dottie Rambo lawsuit...so on and so on....
Wait a minute, how did they know he was for real? To seal the deal, he proved he was close friends with Patrick Duffy, Leif Garrett and Kristy McNichol.
http://gawker.com/5415155/kato-kaelin-picks-the-worst-friends
FULL ACCOUNTING ASAP is the right press release, and frankly the only defense he has at this point in my opinion.
However, they do eat their young,grow tusks when not taken care of and will crap anywhere, just as Durham has done to the system.
Now that Micth made his call to DC to have the Feds drop the action against Durham, it's going to be a dead issue. Notice that there is nothing in the Star at all. Im sure that Mitch took care of that also.
Does Mitch really have that much power in DC thatthe Feds would drop action against one of his biggest givers. I thoguht that Micth was straight up. But this stuff does not get dropped out of the Blue. Mich and Mayor Dum Dum must have really called in thier cards
In our legal system, Tim is innocent until proven guilty. Investors are not that patient.
Who's gonna lend Timmy some money to bail out his mess? NO ONE!!! Watch this baby unfold as Durham sweats like a greased pig in a mudfight to find real cash buyers for his assets...how much do you think he can sell his toys for? Maybe, maybe a total of $30-$40 Million tops. Cochran has his house for sale, between the two of them let's say $42M or be generous and say $50M. They owe $177 MILLION DOLLARS!!!! And they don't have it to pay back!!!!!
Tim Morrison and the federal government don't have to do anything except let time prove them right. Those investment certificates are coming due as we speak...tick tock...tick tock...
"U.S. Attorney Tim Morrison said there was probable cause to believe the assets (which include his 30,000 square foot Geist home, along with other properties and bank accounts) were gained through unlawful acts.
Morrison said the government originally moved to seize Durhamâ??s assets in order to ensure Durham didnâ??t sell off the properties or any of his other assets. "
I am betting Morrison is no dummy and Durham is not out of the woods.
http://www.wishtv.com/dpp/news/crime/case-against-durham-continues-to-unfold
I concede I have never met Tim Durham. I am in another circle, though, and did hear a rumor that he gave a very large retainer to Larry Mackey, which I find very interesting due to some conflicts of interest I will not post in a public forum.
Unlike most except the poster today, and really more out of curiosity I did take the time to Google Tim Durham and read what was posted. I ignored the jargon and stuck to the financials on Obsidian, National Lampoon and Fair Financial (thanks to the IBJ for posting the link to the Offering Memorandum,) as well as the slew of Durham-related businesses that have all gone under. The post today regarding Durham's lack of financial acument is spot on.
I also agree that while local politics might have dealt him a favorable hand for the moment, he will be hard-pressed to curry the same favors in Ohio, especially in lieu of the fact that he has not addressed his investors with any type of response. I can only imagine the stress and horror those people feel in learning about the character of the man they entrusted with valuable life assets. Additionally from what I have read Mr. Durham has extended to himself loans to the tune of around $177,000,000 and he will have to pay those in full. It does not appear to what I have read that Mr. Durham can pay these loans in full and my guess is he will file bankruptcy. Just my two cents for what it's worth.
I'll agree with you on this - the case is far from over.
Feds drop Durham asset-seizure suit
Greg AndrewsNovember 30, 2009Keywords Banking & Finance, Investing, Tim Durham
Back to Top
CommentsE-mailPrintRelated Articles
Fair Finance offices fail to reopen
Disclosures key to feds' probe of Durham's Fair Finance
Related-party loans pile up at Durham-owned finance firm
Feds seek seizure of Durham's assets
NewsTalk: Rich flocking to real estateIn Depth
Hospitals suffer from spiking bond interest rates, investment losses
Nervous banks cut off some borrowers, tighten reins on othersADVERTISEMENTThe federal government on Monday morning filed papers to dismiss a high-profile civil lawsuit that sought to seize Tim Durhamâ??s assets, including his 30,000-square-foot Geist mansion and his 2008 Bugatti sports car.
Tim Morrison, the U.S. attorney for the Southern District of Indiana, said his office had filed the case Nov. 24 to ensure Durhamâ??s assets would not disappear. â??Having [received] appropriate assurance they are not being dissipated, that litigation stopped,â?? said Morrison, who declined to say who provided that assurance.
The short-lived case provided the first public disclosure about the case investigators are trying to build against Durham, 47, the co-owner of Akron. Ohio-based Fair Finance Co. FBI agents on Nov. 24 executed search warrants and seized records and computer equipment at Durhamâ??s office in Chase Tower in Indianapolis and at Fairâ??s Akron offices, but a bureau spokeswoman would not say what agents were after.
The asset-seizure lawsuit alleged Durham, his associates and his companies misled purchasers of investment certificates by telling them their money would go toward purchasing low-risk consumer loans. In fact, court papers allege, the money went to carry out a Ponzi scheme, using money from new investors to pay what it owed prior investors, thereby â??lulling the earlier victims into believing that their money was being [handled] responsibly.â??
The suit was filed one month after IBJ published an investigative story questioning whether Fair, which purchases customer-finance contracts from retailers and other firms, had the financial wherewithal to repay purchasers of about $200 million in investment certificates. The company was allowed to sell the certificatesâ??which range from six months to two yearsâ??only to Ohio residents.
The IBJ story reported that, since Durham bought Fair Finance from Donald Fair in 2002, he had used it almost like a personal bank to fund a range of business interests, some of them unsuccessful. The story noted that he and related parties owed Fair more than $168 million.
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PS
Not So FastNovember 30, 2009 1:22 PM
It's kind of creepy that you keep using the ids of all these dead people. Last night, you posted under Leon's name, and today you invoke the name of an all-time Indiana great (the real deal) baseball player.
But, since you invoke the Hall of Fame, let me invoke the Hall of Shame, staring Tim Durham.
In a classic moment, his own auditor stated "'Goelzer acknowledges remarks by Obsidian's auditing firm in the Company's recent 10-K filing that the Company's recurring losses, its total liabilities and its lack of compliance with the current terms of its debt financing agreements 'raises substantial doubt about the Company's ability to continue as a going concern.'"
What did that cirular say were outstanding loans diverted to Obsidian from the unsophisicated Ohio investors who thought they were investing in a factoring company? I can't remember, it is like tens of millions for that sinkhole alone.
Here's the link if you need a reminder:
http://74.125.95.132/search?q=cache:BFQVrghgUa4J:www.secinfo.com/dVut2.zMEx.htm+%22going+concern%22+obsidian+auditor&cd=2&hl=en&ct=clnk&gl=us
But, since you invoke the Hall of Fame, let me invoke the Hall of Shame, staring Tim Durham. In a classic moment, his own auditor stated "'Goelzer acknowledges remarks by Obsidian's auditing firm in the Company's recent 10-K filing that the Company's recurring losses, its total liabilities and its lack of compliance with the current terms of its debt financing agreements 'raises substantial doubt about the Company's ability to continue as a going concern.'" What did that cirular say were outstanding loans diverted to Obsidian from the unsophisicated Ohio investors who thought they were investing in a factoring company? I can't remember, it is like tens of millions for that sinkhole alone.
Here's the link if you need a reminder:
http://74.125.95.132/search?q=cache:BFQVrghgUa4J:www.secinfo.com/dVut2.zMEx.htm+%22going+concern%22+obsidian+auditor&cd=2&hl=en&ct=clnk&gl=us
Ohio politics are a lot different than Indiana. They don't have to approve him for jack crap, do they? And with no funds coming in, how do you think he is going to pay his investors back when it is obvious to most he spent the money on what?
In fairness to Durham perhaps he can get a line of credit. How about Old National Bank of Evansville? Oh yeah, they sued him for not paying his bills to him. How about Bank One or Chase or Huntington or Fifth Third? Oh, that's right, he has toooooo much debt to qualify for a semblence of what he "borrowed" from the Ohio investors.
Cases like this have highs and lows. You may perceive Morrisons action to be a high, but this case is far from over.
If you were interested in justice - or protecting investors - you would hope the case would be resolved when the truth was known. Instead, your desire is obviously for Durham to fail.
And, isn't that really the problem here? Biased reporting by the IBJ, based upon bitter former colleagues and bad information, leads to an over-reaction by the Government (understandable in the climate of Madoff), resulting in irreparable damage to investors and employees.
My guess is Durham will be fine. Too bad the attempts to "get" him will hurt so many who don't deserve it.
Sad, sad, sad what jealousy can do.